First Interstate BancSystem (FIBK)

Regional banking company First Interstate BancSystem (NASDAQ:FIBK) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 20% year on year to $313 million. Its GAAP profit of $1.08 per share was 65.3% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1971 and still guided by founding family principles, First Interstate BancSystem (NASDAQ:FIBK) operates a network of community banks across 14 western and midwestern states, offering comprehensive banking services to individuals, businesses, and government entities.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

First Interstate BancSystem competes with other regional banks operating in the western and midwestern United States, including U.S. Bancorp (NYSE:USB), Zions Bancorporation (NASDAQ:ZION), PacWest Bancorp (NASDAQ:PACW), and Western Alliance Bancorporation (NYSE:WAL).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Unfortunately, First Interstate BancSystem’s 9.9% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the banking sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. First Interstate BancSystem’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, First Interstate BancSystem reported robust year-on-year revenue growth of 20%, and its $313 million of revenue topped Wall Street estimates by 22.2%.

Net interest income made up 80.7% of the company’s total revenue during the last five years, meaning First Interstate BancSystem barely relies on non-interest income to drive its overall growth.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

First Interstate BancSystem’s EPS grew at a weak 3% compounded annual growth rate over the last five years, lower than its 9.9% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For First Interstate BancSystem, its two-year annual EPS growth of 9.1% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, First Interstate BancSystem reported EPS of $1.08, up from $0.50 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects First Interstate BancSystem’s full-year EPS of $2.95 to shrink by 10.4%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

First Interstate BancSystem’s TBVPS grew at a sluggish 1.6% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 6.7% annually over the last two years from $19.68 to $22.40 per share.

Over the next 12 months, Consensus estimates call for First Interstate BancSystem’s TBVPS to grow by 1.9% to $22.84, inadequate growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, First Interstate BancSystem has averaged a Tier 1 capital ratio of 12.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, First Interstate BancSystem has averaged an ROE of 8%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was good to see First Interstate BancSystem beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $36.68 immediately following the results.

Updated: January 28, 2026 at 11:39 PM EST

When considering an investment in First Interstate BancSystem, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

We see the value of companies driving economic growth, but in the case of First Interstate BancSystem, we’re out. To kick things off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its expanding net interest margin shows its loan book is becoming more profitable, the downside is its projected EPS for the next year is lacking. On top of that, its estimated net interest income for the next 12 months are weak.

First Interstate BancSystem’s P/B ratio based on the next 12 months is 1.1x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $37.38 on the company (compared to the current share price of $36.68).